SIPAG Company provided the following accounts abstracted from the unadjusted trial balance at year- end: Accounts Receivable (debit) 5,000,000 Allowance for doubtful accounts (credit) - 40,000 Net credit sales (credit 20,000,000 The entity estimated that 3% of the gross accounts receivable will become uncollectible. What amount should be recognize as doubtful accounts expense for the current year?

SIPAG Company provided the following accounts abstracted from the unadjusted trial balance at year- end: Accounts Receivable (debit) 5,000,000 Allowance for doubtful accounts (credit) - 40,000 Net credit sales (credit 20,000,000 The entity estimated that 3% of the gross accounts receivable will become uncollectible. What amount should be recognize as doubtful accounts expense for the current year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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One company has estimated that $3150 of its accounts receiable will be uncollectible. If allownace for doubtful accounts already has a credit balance of $1102, and the percentage of receivables method is used, it sadjustment to recrod for the period will require a debit to what for what amount?
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Mazie Supply Company uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $104,500, and it estimates that 3% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,777 credit balance before the adjustment. (b) a $523 debit balance before the adjustment.
At the end of the year, Brinkley Incorporated’s balance of Allowance for Uncollectible Accounts is $2,400 (debit) before adjustment. The company estimates future uncollectible accounts to be 3% of credit sales for the year. Credit sales for the year total $119,000. What adjustment would Brinkley record for Allowance for Uncollectible Accounts using the percentage-of-credit-sales method? (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
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